How much money should a bank be willing to loan a real estate developer who will repay the loan by selling seven lakefront lots at $120,000 each 2 years from now? Assume the bank’s interest rate is 10% per year.
What will be an ideal response?
P = 7(120,000)(P/F,10%,2)
= 840,000(0.8264)
= $694,176
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What will be an ideal response?
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Fill in the blank(s) with the appropriate word(s).
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